Is the Metaverse Declining with the Rise of AI?

Author / Alinda GuptaCompiled by / oneflumen, Centreless

The emergence of the Metaverse has made many things beyond our imagination possible, shaping the concepts of future work, mental health and influential marketing. However, at a time when artificial intelligence (AI) is booming, the future of the Metaverse seems to be in jeopardy.

Facebook spent billions of dollars trying to become synonymous with augmented reality (AR) and virtual reality (VR) when it changed its name to "Meta" to represent its new direction and ambitions. However, after suffering a loss of $26 billion from this new business, "Meta" decided to shift its focus to the field of AI. This is not surprising, as the success of OpenAI's ChatGPT chatbot in recent months has inspired many other companies to follow suit and expand their businesses by taking advantage of generative AI technology.

Facebook's parent company Meta will form a new product team focused on generative artificial intelligence and bring together teams across the company to create innovative tools and experiences to integrate this technology into all Meta products. The long-term goal is to develop AI characters to assist users in "many ways," said Meta founder and CEO Mark Zuckerberg in a Facebook post published on February 28.

But what does it mean for the entire metaverse?

How did the metaverse lose momentum?

When talking about the metaverse, you can't avoid virtual land. It should be said that in the early days of the development of the Metaverse, virtual land can be seen as synonymous with the Metaverse.

In the Metaverse, virtual real estate dominates, and the price of Ethereum directly affects the value of virtual land. However, the volatility of Ethereum prices has put many buyers and sellers in trouble. According to data from WeMeta, this has led to a significant drop in the average sales price of virtual land, from more than $11,000 to less than $2,000.

In addition, in 2022, the sales volume of virtual land in Ethereum-based Metaverse projects (such as Sandbox and Decentraland) suffered a heavy blow, and their valuations and other key indicators also showed a significant decline.

In February 2022, the average price of land sold on Decentraland reached an all-time high of $37,200. However, by August 1, its value had dropped to an average of around $5,100. Similarly, the average price of sales on the Sandbox plummeted from around $35,500 in January to around $2,800 in August.

The volatility of cryptocurrency prices, especially Ethereum prices, has introduced a new layer of uncertainty to the market, making investors unsure about the future of the virtual assets they hold. In addition, the current Metaverse lacks proper infrastructure, governance, and collaboration mechanisms. This may be why some people believe that in its current state, the Metaverse is nothing more than a marketing gimmick.

The Potential of AI

In the past three years, generative AI solutions have attracted more than $1.7 billion in venture capital, with AI-assisted drug discovery and AI software coding being the two most funded areas.

As the field of artificial intelligence rapidly advances, its impact is being felt across industries, including marketing and media. Leading research and advisory firm Gartner predicts that the use of generative AI in these fields will increase significantly in the coming years.

By 2025, 100% of marketing messages sent by large organizations are expected to be automatically generated by AI, and this proportion will increase from less than 2% in 2022 to more than 30%. And the impact of generative AI will not stop there. According to Gartner, a blockbuster movie with 90% of the main content, from text to video, generated by AI may be released around 2030.

Although generative AI has great potential, it currently has access restrictions. For example, the ChatGPT mechanism is not open source, which means it cannot be used publicly. This restriction makes it difficult for other companies to replicate the technology. However, Facebook aims to launch smaller, enterprise-ready and optimized AI models, which will help make generative AI more widely available and accessible.

Death of the Metaverse: Fad or Fact?

While some reports suggest that this is the end of the Metaverse, some argue that we should not tie Meta's reorientation to the development of the Metaverse as a whole. For example, computer scientist Roy Amara proposed Amara's Law, which states that humans often misjudge the timing and potential of technological breakthroughs, with a tendency to overestimate their short-term impact and underestimate their long-term potential. This tendency is also reflected in the skepticism and over-hype of emerging technologies such as self-driving cars, virtual reality (VR), and augmented reality (AR). Even the Internet was once seen as a trend.

Moreover, AI — especially generative AI — may even have the potential to advance the Metaverse by creating more convincing

environments and characters.

What’s more, some people vehemently deny that the Metaverse will die or diminish in popularity. However, as many companies adopt Metaverse technologies, the field will flourish. For this to happen, some structural changes will need to occur. For example, VR headsets will need to become cheaper, and virtual systems will need to perform better in terms of privacy.

Almost every new invention was once a fever dream — and often a terrifying one. However, over time, these new technologies become so embedded in our daily lives that we can’t imagine life without them. Perhaps this is the fate of the Metaverse. If not, then another immersive technology invention will take its place, and we’ll be left to debate whether the Metaverse is at the dawn or in decline.